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TMI Blog1994 (4) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... d at Kansbahal in the State of Orissa. The appellants are functioning under the Modvat Scheme. During the period from June, 1987 to April, 1991 the appellant company took Modvat Credit of the duty paid on the inputs brought to its factory for being used in or in relation to the manufacture of its final products. According to the appellants, the said Credits were taken after complying with all the required formalities and after disclosing all the relevant facts to the Department and with the knowledge of the Central Excise Officers. 3. On 17-6-1992, the Collector of Central Excise and Customs, Bhubaneswar issued a show cause notice to the appellants alleging that they had availed of Modvat Credit during the abovesaid period in an irregular way and the same was availed of fraudulently with an intent to evade payment of duty. 4. Such irregularities which are mentioned in the show cause notice are stated briefly as under :- (i) In respect of the consignments imported through Calcutta Port by the applicant, the name of the importer in the Bills of Entry was mentioned as L T Ltd., Calcutta and the said Bills of Entry were not endorsed by the Calcutta Office of the applicant in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that the period involved in this case is from June, 1987 to April, 1991. But the show cause notice was issued on 17-6-1992. i.e. long after expiry of the period of six months from the relevant date and therefore, the whole demand is barred by limitation. He also submitted that there is no fraud or collusion with an intent to evade payment of duty. The conclusion reached by the learned Adjudicating Authority that there was collusion is not based on any evidence and there is no such allegation in the show cause notice also. Therefore, he stated that the whole demand is barred by limitation. 7. On the merits of the case he stated that the learned Adjudicating Authority erred in holding that the Modvat Credits were taken by the appellant company without the authority of law and that the same were taken with an intent to evade payment of duty. He pointed out that Rule 57G(2) of the Central Excise Rules, 1944 only provides that no Modvat Credit shall be taken unless the inputs are received in the factory under cover of a gate pass, an AR 1, a Bill of Entry or any other document as may be prescribed by the Board in this behalf evidencing payment of duty on such inputs. But in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gards payment of duty were clearly mentioned in the said delivery challans which were signed amongst others by the in-charge of the stock-yard concerned. When all such details were mentioned in the said computerised challans, Shri Bagaria contended, there was no question of the stock-yard in-charge again issuing a separate certificate for the same particulars which were mentioned therein. He also pointed out that in most of the challans there was a separate endorsement made by the stock-yard in-charge certifying the payment of duty at the rates mentioned in the said challans on the goods covered thereby. In that view of the matter, he contended that the finding of the Adjudicating Authority that no duty paying documents were produced is not correct. 10. With respect to the inputs at Serial Nos. 123 to 152 and 156 to 162 of the annexure to the show cause notice, Shri Bagaria contended that the Collector erred in holding that the Despatch Advice-cum-Invoice-cum-Gate Pass of Rourkela Steel Plant and the invoices of Durgapur Steel Plant were not original. He further contended that all these documents were original duty paying documents under cover of which the goods were cleared by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de Notice No. 140/GL/100/86 dated 21-8-1986, such duty paying documents should be in the name of the consignee who is to take Modvat Credit thereon. Where, however, the duty paying document is in the name of a consignee and who does not avail of Modvat Credit, but transfers the goods along with the duty paying documents, he should make an endorsement in favour of the second consignee in the body of the duty paying document and then only the second consignee can avail of the Modvat Credit on the basis of such endorsed duty paying document. He, therefore, contended that no Modvat Credit is admissible if the duty paying document is not in the name of the manufacturer availing of the Credit not endorsed in his favour. 14. Shri Mandal also contended that proviso to Rule 57G(2), inter alia, stipulates that the Credit of duty on the inputs should be taken only if such inputs at the time of their receipt in factory were accompanied by a gate pass, an AR-1, a bill of entry or any other document as prescribed by the C.B.E.C. evidencing the payment of duty on such inputs. Rule 52A(2) read with Rule 173G stipulates that the original copy shall accompany the consignment to its destination. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of by the appellant Company. He also drew our attention to the discussion made in this behalf in the impugned order and stated that the same is in accordance with law. 17. Coming to the aspect of limitation he stated that M/s. L. T. Ltd., Kansbahal had taken Credit on the basis of documents which are not in their name and not duly endorsed in their favour and in some cases, the documents are not original also. This they had done in spite of Collectorate Trade Notice No. 140/GL-100/86, dated 21-8-1986. Thus they had deliberately availed of the same with an intent to evade payment of duty. He also drew our attention to the observations of the Collector to the effect that the concerned Departmental Officers to whom instructions had been issued not to allow the Modvat Credit in such cases, colluded in allowing the inadmissible Credits. Therefore, this is a case of collusion also and the extended period under proviso to sub-section (1) of Section 11A of the Central Excises and Salt Act, 1944 is rightly invoked by the Adjudicating Authority and he thus justified the same. 18. We have considered the submissions of both sides.We will now first deal with the aspect of limitation. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein, the appellant Company took the Modvat Credit without proper duty paying documents with an intent to evade payment of duty. But it is seen from the order itself that this Modvat Credit taken by the appellant Company was allowed by the Central Excise Officers who are posted in the appellants factory. The appellants thus had taken the Modvat Credit by disclosing all the facts to the Central Excise Officers. The Credits therefore were taken with the full knowledge of the Central Excise Officers. The appellants had filed a proper Modvat Credit declaration in terms of Rule 57G of the Central Excise Rules, 1944 and maintained all the relevant records. Entries about the Credits taken and utilised were duly made regularly in RG 23A (Part I and II) Register. They were regularly checked and scrutinised by the officers concerned and the extracts of RG 23A were also regularly filed along with monthly returns. It is, therefore, clear that the Modvat Credit was taken and utilised by the appellant Company by declaring all the necessary formalities to the Central Excise Officers and with their full knowledge. Even in his order, the learned Collector has admitted this fact. In such circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om them under Section 11A of the Central Excises and Salt Act, 1944 read with proviso to its sub-section (1). They are also liable to penal action under Rule 173G of the Central Excise Rules, 1944. A perusal of the abovesaid allegations made in the show cause notice goes to show that there was no whisper therein to support the allegation, that there was any fraud or collusion in between the appellants as well as the officers concerned. In absence of such an allegation and particulars in the show cause notice it is not known as to how the learned Collector has come to such a conclusion. There is also no basis or evidence disclosed in the order to come to the conclusion that there was any such collussion. Even assuming that the officers allowed the Modvat Credit which was not admissible, that will only be a wrong committed by the officers in this regard. But in order to avail of the extended period of limitation, it must be shown that the appellants availed the credit by suppressing certain facts or by wilful misstatement of certain facts or with an intent to evade the payment of duty. There is no evidence of any suppression or wilful misstatement. The mere fact that there is a wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer. 24. With respect to Serial Nos. 24 to 26, 28, 34, 35, 47, 56, 63, 69, 72, 173 and 177 of the annexure to the show cause notice, the alleged irregularity is to the effect that the abovesaid consignments were in the name of the consignee `M/s. L T Ltd., Calcutta . But in all the abovesaid cases except Serial No. 173, the orders were placed upon the suppliers by the appellants Kansbahal Works. In respect of Serial No. 173 the order was placed by the appellants Calcutta Office. In most of the orders upon the suppliers of the inputs it was clearly stated that the goods should be despatched directly to Kansbahal Works. In the Purchase Orders, in Column 17 delivery instructions were given to the suppliers for despatching the goods directly to the Kansbahal Works. From the documents of the transport companies including the consignment notes it is evident that all these consignments were actually brought to the Kansbahal Works and delivered there. In the gate passes of the suppliers of the aforesaid goods, the expressions C/O. Kansbahal Works , Larsen Toubro Ltd., Kansbahal Works , A/c Kansbahal Works etc. were also mentioned. The duty paying documents under cover o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now seen that the order for each of the said consignments was placed upon M/s. Shalimar Paints Limited by the appellants Kansbahal Works. The number and date of such orders placed by Kansbahal Works were also mentioned in the gate passes of M/s. Shalimar Paints Ltd. under cover of which the goods were cleared from their factory. The said goods covered by each of the said gate passes were despatched pursuant to the said orders and were meant for the appellants Kansbahal Works. Since the appellants placed above-said orders through the above depots of M/s. Shalimar Paints Limited situated at Calcutta and Cuttack, the gate passes also contained their names and addresses. Further, it is seen that in those gate passes the appellants name as well as its number and date of its order were also mentioned. It is also evident from the transport companies documents that the transportation of the goods was done to the Kansbahal Works. The duty paying documents under cover of which the said consignments came to the factory were also examined by the Central Excise Authorities having jurisdication over the appellants factory at Kansbahal and the said Modvat Credits were duly allowed by them b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rised selling agents of the manufacturers, M/s. Precision Fasteners Ltd. The appellants had placed the orders for the goods covered by the aforesaid serial numbers of the annexure to the S.C.N. in favour of M/s. Kalinga Industrial Fasteners Pvt. Ltd. In the said orders it was clearly stated that items covered thereby would be of Unbrako Make manufactured by M/s. Precisions Fasteners Ltd. It is pursuant to the said orders placed by the appellants that the goods were supplied to it since orders were placed through M/s. Kalinga Industrial Fasteners Pvt. Ltd. Their name was also mentioned in the gate passes. However, it is seen that in the gate passes the appellants name was also mentioned by stating A/C. Larsen Toubro Ltd., Kansbahal. It is also clear that the entire goods covered by each of the abovesaid gate passes were cleared from the factory of the manufacturer pursuant to the orders placed by the appellants and they were meant for the appellants Kansbahal Works and the appellants also made entries in RG-23A (Part-I II) register. Those entries are examined by the Central Excise authorities. The copies of the invoices and the gate passes in form GP-1 and transport docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery challans were also computerised and were issued by the stock-yard of Steel Authority of India. In those challans the fact of payment of duty was clearly mentioned. Thus when these challans of Steel Authority of India were duly signed by its stock-yard in-charge indicating the payment of duty, that itself can be treated as an evidence for payment of duty and merely on the ground that a separate certificate in this regard was not produced, the Modvat Credit cannot be disallowed. It is not the case of the Department that these payments mentioned in these documents were not genuine ones. Apart from this, it is also observed from some of these challans that a separate endorsement was made by the stock-yard in-charge certifying that the payment of duty mentioned therein was made for those goods. The appellants had produced all these documents before the Adjudicating Authority and when these challans themselves contained the information with respect to the payment of duty, the disallowance of Modvat Credit only on the ground that a separate certificate from the stock-yard in-charge was not furnished, is not tenable. 30. With respect to Serial Nos. 123 to 152 and 156 to 162 of the an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised its invoice in the appellants name and in the invoice its name as well as the address of Kansbahal Factory was also duly mentioned. In this invoice, the number and date of the connected despatch advice was also mentioned. In the despatch advice all the relevant details like the appellants name and address, description of the goods, gross weight, net weight, number and date of the appellants works order etc. were duly given. The goods came to the appellants factory. The documents under the cover of which the goods were carried to the appellants factory were also examined by the Central Excise Officers, which were produced before the Collector. These were collectively marked as `U as annexed to this appeal. The only ground on which the Collector rejected the claim is that the words `original for carrier were not printed, but stamped. This aspect was already discussed by us in the previous paragraph. The disallowance of the Modvat Credit on this gound cannot be upheld. The words, `original for carrier were stamped and merely because it was not printed, the Modvat Credit cannot be disallowed. There is no requirement in law that these words should be printed. The document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under cover of the said appropriate documents evidencing payment of duty on the inputs as already discussed by us above and therefore, the question of disallowing the Modvat Credit would not arise in this case. It is also clear that the requirement under Rule 57G is that the Modvat Credit should be taken on the basis of the documents evidencing payment of duty on the inputs in question. There is no requirement that the word, `original on such duty paying documents should be printed and not rubber-stamped. So also, the question of disallowing Modvat Credit on the ground that the words, `original for carrier were not printed, also is not correct. In this view of the matter, the impugned order is not sustainable, both on merits as well as on the point of limitation. Accordingly, we set aside the impugned order and the demand of duty as well as the penalty imposed on the appellants in terms of the impugned order, are hereby set aside. The appeal is thus allowed. 33. [Assent per : K. Sankararaman, Member (T)]. - I agree, I would only like to add that the decision of the Collector that the inputs in question were not covered by valid duty-paying documents and that they required to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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